Technical Analysis Indicator for Forex Trading

Forex traders often use many indicators like as Bollinger bands, pivot points, MACD, moving averages and other measures to help them determine where to enter or exit trades. Using technical indicators is fine, but many of its operators, or they simply wrong.

Many people believe that the merchants of modernity can simply download an indicator and then mechanically apply in their negotiations and to do so for profit. This is just an illusion. The success that traders, there is much more to use the indicators, not just ask to generate buy / sell signals or pin-point exact entry points. Technical indicators are only part of its strategy.

Let's look at some of the reasons why you should not put their faith in all these indicators bit confusing.

Taking moving averages (MA), for example. It is "supposed" to show the direction of the trend. The most commonly used and easily MA 200 days, 100 days MA, MA 50 days, 35 days and 21 days MA, but are valid only on the daily charts. Some days, currency traders say it's a good sign for 50 days in the MA is crossed by the MA and 13 days when that happens, you must trade within the meaning of the cross.

The problem with this (except for the fact that each day only works on maps) is that these types of crosses do not occur often enough for traders to exploit them. This can lead to a situation where operators are looking at what we thought was a crossroads of time and investment will not be crossed. Worse, it can lead to a situation where there are days of "stalking" and try to anticipate a cross. If you do, you're out of the market you are trying to trade. Not only try to guess what prices will do, but you have to guess what the indicator on the price, is about to do.

Other problems with the technical indicators are the problems with the prices and the prices offered by your agent. Forex market makers and agents, as such, other runners will be given several awards and honors at a given time. Of course, a different price may lead to a situation where different operators, trading and market indicators are the same, giving different answers. What technical indicators as arbitrary in May.

Finally, many of these indicators have been developed by people trading in the stock market. With the growth of computers and software to take account of these indicators, technical analysis has become very popular and spread to other markets such as the Forex market. Currency traders should be aware, however, is that these indicators have been developed at a time when real-time information does not exist. As such, the limitations of technical analysis is even more exaggerated in foreign currencies is not only a technical analysis of historical events, it is increasingly the currency markets, real-time market events.

Conclusion:

Successful Currency traders understand the limits of technology and the fact that indicators of technical analysis should include only a part of its strategy. In a recent visit by the foreign exchange market by large banks and institutions - the main factors that influence the currency market has been investigated to better understands what the tests they use. The result may be surprising to some tarders. The survey found that only 26% use technical analysis and indicators, compared with 41% reported that through fundamental analysis.